SLIDESHOW: The history of health-care costs


View Photo Gallery: WONKBLOG | Health care spending grew more slowly in the past two years than it has in over five decades. Even with health care costs growth slowing, the U.S. still devotes 18 percent of its economy to the sector, more than most other industrialized countries. These charts explain how that happened, what drives up health care costs and whether they’ll continue to slow in years to come.

Think of the National Health Expenditure report as a State of the Union address for health policy wonks. The annual assessment from the Center for Medicare Services lays out the highs and lows of the year in health care spending. The report includes spending on federal programs, such Medicare and Medicaid, alongside all the health care costs of American households and businesses.

The Obama administration has just published this year’s report and, on the surface, there’s a lot to celebrate. After years of outstripping the rest of the economy, health care costs are now growing at the exact same rate as the rest of the gross domestic product. Over the past two years, in fact, health care costs have grown more slowly than any other point in the past five decades, according to the report, parts of which are published in the journal Health Affairs. They rose 3.8 percent in 2009 and 3.9 percent in 2010:


The forces that have driven down the cost of health care, however, aren’t likely to get much celebration at all. The new data link the slowdown to the recession, as more Americans remain uninsured and unable to cover medical spending.

“Although medical goods and services are generally viewed as necessities, the latest recession had a dramatic effect on their utilization,” a team of researchers from the Medicare’s Office of the Actuary write in Health Affairs. “Growth in the use and intensity of services represented just 0.1 percentage point of the 3.7 percent growth in personal health care spending.”

That suggests that the easing of health spending is more a product of the weak economy and less a sign of success in wrestling down health care costs.

And, even though health care costs are slowing, we’re still devoting nearly 18 percent of our economy to the sector. Check out the seven charts up top, mostly drawn from the report, that explain the history of health care spending in the United States.

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